EQIX Rises on Analyst Day; Sees $3B Rev by 2015

By Tiernan Ray

Shares of Internet co-location provider Equinix (EQIX) are up $3.19, or 1.9%, at $173.07 as the company’s analyst day event unfolds.

Equinix provided a deck of slides for the event, and the key slide for investors may be slide number 23, in which the company reiterates a previously issued forecast for $1.89 billion in revenue this year and more than $860 million in Ebitda. Those numbers are roughly in line with Street expectations.

Equinix is aiming to reach $3 billion in revenue by 2015.

Yesterday I had a chance to talk with Equinix’s CEO, Steve Smith. Smith emphasized that the company is focusing exclusively on one of four ways in which Internet data centers are being built. Method one is for a company to do it all themselves, leasing fiber, fitting out their glass house of servers, etc. The second is to buy co-location capacity, where the company parks its servers with an owner of facilities who can make sure those servers have access to fast on-ramps and off-ramps to the Internet. The third method is to buy “hosted” data operations, where servers are provisioned and maintained for a fee, as with RackspaceHosting (RAX). And the forth method is to simply buy “cloud computing” capacity from someone such as Amazon.com (AMZN).

Smith says Equinix has no intention of moving beyond step two, co-l0cation, to step three, hosting. It has 99 data centers around the world, which means that it can put customers close to bandwidth in many regions. And the company actually has Amazon’s “Web Services” business as one of its customers. Smith says Equinix one of the sweeteners that can help attract customers is that by supply Amazon and other cloud providers, it can put individual customers closer to the emerging hot spots of Internet data.

Many of the other free-standing co-location companies have been gobbled up in recent years by telcos such as Verizon Communications (VZ). Others are primarily leasing real estate, in his view, such as Digital Realty Trust (DLR), one of many companies that function as REITs.

There has been some discussion of Equinix becoming a REIT. Smith said that possibility is still being discussed, but he had no update on the company’s intentions.

About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.